Backlash to the Pinterest Valuation: $1.5 Billion? Really?

AllThingsD’s scoop about a new round of funding for Pinterest has now been confirmed. Rakuten, the largest ecommerce site in Japan, is leading a $100 million investment round in Pinterest at a $1.5 billion valuation, eclipsing Instagram’s valuation by a cool half billion. Existing investors, including Andreeseen Horowitz, Bessemer Venture Partners, and FirstMark Capital, as well as previous angel investors, also participated.

If you’re following along at home, that’s an $800 million valuation bump in eight months for a company with no revenue yet to speak of. Last October, Pinterest was valued at just $200 million.

The synergy for the two companies is obvious: Pinterest gets a leg up in expanding into Japan, where Pinterest is “growing very fast,” says Rakuten’s CEO Hiroshi Mikitani, as well as the ecommerce giant’s 17 other markets. But for Rakuten, the deal may be even sweeter. As TechCrunch reports, roughly 70 percent of Japan’s Internet population (about 80 million people) have a Rakuten ID–the same kind of ID consumers here have with Apple or Amazon, that includes payment details.

It is this ID that will pontentially become the lynchpin of a commercial service on Pinterest: “We want to enable our users to pin their own images with our ID,” he says. “Users can click and buy with it, and in the future we can create more new services.” He notes that the “rich, graphic social network” can be used for “so many interesting ideas using the Rakuten ID.” One other area, TechCrunch understands, is for users logged in with Rakuten IDs to pin images and then use those pins to buy items away from Pinterest, on Rakuten’s own Rakuten Ichiba site.

Unlike Instagram or Facebook, Pinterest has always had an easy relationship with commerce, and, in theory that could lead to monetization. Betabeat, for one, has already argued that for all it’s “revolutionary” influence, the site functions not unlike a glorified choose-your-own-catalog.

But like the Draw Something, the beneficiary of another headline-grabbing valuation, Pinterest has also been losing daily active users, at least according to the numbers from AppData related to users that connect through Facebook. “So it better solve that problem,” advises Business Insider. Good call, guys! Here’s one solution. Traffic appears to have picked back up, right around the time The Next Web broke the story about an impending $1 billion valuation. Maybe that’s the new user acquisition strategy in these bubblicious time?

via AppData

After the valuation news broke, techies on Twitter also weighed in with a hefty dose of skepticism, including AllThingsD’s Kara Swisher, breaker of said valuation.